ANN ARBOR, Mich.--(BUSINESS WIRE)--Kaydon Corporation (NYSE:KDN) today announced its results for the first
fiscal quarter ended March 31, 2012.

“Looking ahead, we expect improvement during the balance of the year in
both non-wind orders and shipments. We also expect margin improvement in
our base industrial businesses as the year progresses due to improved
volume and efficiencies to be realized from recent manufacturing
consolidations.”

Consolidated Results

Sales in the first fiscal quarter of 2012 were $116.5 million, compared
to sales of $108.3 million in the first quarter of 2011.

Adjusted earnings per share, as defined below, was $.44 in the first
quarter of 2012, compared to $.42 in the first quarter of 2011. GAAP
diluted earnings per share was $.38 in the first quarter of 2012
compared to $.36 in the first quarter of 2011.

Adjusted EBITDA, was $26.8 million, or 23.0 percent of sales, during the
first quarter of 2012, compared to $26.9 million, or 24.9 percent of
sales, during the first quarter of 2011.

This press release includes certain non-GAAP measures, including
Adjusted net income, Adjusted earnings per share, Adjusted EBITDA and
free cash flow. Readers should refer to the attached Reconciliation of
Non-GAAP Measures exhibit for the reconciliations of the applicable GAAP
measures to the non-GAAP measures presented.

Adjustments to GAAP results include certain items management considers
in evaluating operating performance. During the first quarter of 2012,
Kaydon incurred $1.3 million of costs associated with its recent
dividend recapitalization, $0.3 million of costs associated with
restructuring and arbitration activities and $1.1 million of non-cash
amortization of previously incurred net actuarial losses related to
postretirement benefit plans. Recent interest rate declines have
resulted in higher net amortized actuarial losses associated with
liabilities which, to a large extent, have already been funded. Kaydon
has averaged a funded status of approximately 90 percent over the past
five years and is currently approximately 91 percent funded.

Management Commentary

James O’Leary, Chairman and Chief Executive Officer commented, “Our
results for the first quarter of 2012 were solid but reflect the
generally uneven economic environment, principally in Europe, that has
characterized recent quarters. During the quarter, we began to see
relative stabilization in our well diversified military businesses, year
over year improvement in our wind business and generally solid, if
unspectacular, results in our broad industrial portfolio which varied
greatly by end market.

“Looking ahead, we expect improvement during the balance of the year in
both non-wind orders and shipments. We also expect margin improvement in
our base industrial businesses as the year progresses due to improved
volume and efficiencies to be realized from recent manufacturing
consolidations.

“The largest uncertainty, outside of general economic shocks, remains
the political climate surrounding renewable energy policy. In the event
an extension of the Production Tax Credit is not enacted in 2012, we
will need to consider additional operating cost reductions in the second
half of the year to align our wind energy bearing capacity with market
demand. We are currently reviewing multiple options to continue to serve
this market while optimizing the longer term interests of our
shareholders.

“Despite the current uncertainty in the global economy and the
anticipated challenges ahead, we remain highly confident of Kaydon's
long term strengths and the actions taken over recent years to further
leverage them. Despite the unprecedented volatility in operating
conditions since the onset of the Great Recession, we have maintained
consistently high levels of output, profitability, and cash generation,
which is the hallmark of a strong, diversified industrial company. Our
confidence in this model and in our long term prospects was evidenced by
our recently completed special dividend and our ongoing commitment to
consistent, profitable growth and steady return of capital to our
shareholders.”

Segment Results and Review

Friction Control Products sales in the first quarter of 2012 were $65.8
million, compared to $60.9 million in the 2011 first quarter. First
quarter 2012 Friction Control Products operating income totaled $11.8
million, compared to $9.9 million in the prior first quarter. The
improvement relative to prior year was attributable to improved
shipments of both wind energy and heavy equipment products and the
absence of restructuring costs incurred in the prior first quarter, more
than offsetting lower shipments of medical and semiconductor products.
Management expects annual wind energy sales in the range of $60 to $70
million for 2012 as the wind climate remains highly volatile. Management
also expects continued improvement in heavy equipment shipments based on
recent quotation activity.

Velocity Control Products sales in the first quarter of 2012 were $24.3
million, compared to $19.6 million in the first quarter of 2011. The
sales growth was primarily attributable to the Hahn acquisition.
Operating income for this segment totaled $5.8 million in the first
quarter of 2012 and 2011 with the favorable impact of Hahn offset by
lower international shipments and unfavorable mix.

Other Industrial Products sales in the first quarter of 2012 were $26.4
million, compared to $27.8 million in the 2011 first quarter. Operating
income equaled $1.9 million in the first quarter of 2012, compared to
operating income of $2.5 million in the first quarter of 2011. Results
were impacted by lower project sales of filtration products, unfavorable
mix and charges associated with a reduction in force.

Order Activity

Orders were $109.8 million in the first quarter of 2012, compared to
$110.4 million in the first quarter of 2011. Backlog at March 31, 2012
was $174.9 million compared to $181.6 million at December 31, 2011, and
$203.0 million at April 2, 2011.

Financial Position and Free Cash Flow

Free cash flow was $4.4 million in the first quarter of 2012, compared
to $3.0 million in the first quarter of 2011.

As of March 31, 2012, the Company had unrestricted cash totaling $36.3
million. During the first quarter of 2012, the Company entered into a
new credit agreement providing for a $150 million term loan and $250
million revolving credit facility. The Company borrowed $150 million
under the term loan facility which, together with $186 million of cash,
was used to fund a $10.50 per share special dividend to shareholders
paid on March 26, 2012. There were no borrowings outstanding under the
revolving credit facility on March 31, 2012.

About Kaydon

Kaydon Corporation is a leading designer and manufacturer of custom
engineered, performance-critical products, supplying a broad and diverse
group of alternative energy, military, industrial, aerospace, medical
and electronic equipment, and aftermarket customers.

Conference call information: At 11:00 a.m. Eastern time today, Kaydon
will host a first quarter 2012 earnings conference call. The conference
call can be accessed telephonically in a listen-only mode by dialing
1-877-857-6177 and providing the following passcode number: 800500.
Participants are asked to dial in 10 minutes prior to the scheduled
start time of the call.

Alternatively, interested parties are invited to listen to the
conference call on the internet at:

or by logging on to the Kaydon Corporation website at: http://www.kaydon.com
and accessing the conference call at the “First Quarter 2012 Conference
Call” icon.

To accommodate those that are unable to listen at the scheduled start
time, a replay of the conference call will be available telephonically
beginning at 2:00 p.m. Eastern time today through Tuesday, May 15, 2012
at 2:00 p.m. Eastern time. The replay is accessible by dialing
1-888-203-1112 and providing the following passcode number: 4623200.

Additionally, interested parties can access an archive of the conference
call on the Kaydon Corporation website at http://www.kaydon.com.

This press release contains forward-looking statements within the
meaning of the Securities Exchange Act of 1934 regarding the Company’s
plans, expectations, estimates and beliefs. Forward-looking statements
are typically identified by words such as “believes,” “anticipates,”
“estimates,” “expects,” “intends,” “will,” “may,” “should,” “could,”
“potential,” “projects,” “approximately,” and other similar expressions,
including statements regarding general economic conditions, competitive
dynamics and the adequacy of capital resources. These forward-looking
statements may include, among other things, projections of the Company’s
financial performance, anticipated growth, characterization of and the
Company’s ability to control contingent liabilities, and anticipated
trends in the Company’s businesses. These statements are only
predictions, based on the Company’s current expectations about future
events. Although the Company believes the expectations reflected in the
forward-looking statements are reasonable, it cannot guarantee future
results, performance or achievements or that predictions or current
expectations will be accurate. These forward-looking statements involve
risks and uncertainties that could cause the Company’s actual results,
performance or achievements to differ materially from those expressed or
implied by the forward-looking statements.

In addition, the Company or persons acting on its behalf may from time
to time publish or communicate other items that could also be construed
to be forward-looking statements. Statements of this sort are or will be
based on the Company’s estimates, assumptions, and projections and are
subject to risks and uncertainties that could cause actual results to
differ materially from those included in the forward-looking statements.
Kaydon does not undertake any responsibility to update its
forward-looking statements or risk factors to reflect future events or
circumstances except to the extent required by applicable law.

Certain non-GAAP measures are presented in this press release. These
measures should be viewed as supplemental data, rather than as
substitutes or alternatives to the most comparable GAAP measures.

KAYDON CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended

March 31,

April 2,

2012

2011

Net sales

$

116,466

$

108,341

Cost of sales

74,867

69,519

Gross profit

41,599

38,822

Selling, general and administrative expenses

24,264

21,323

Operating income

17,335

17,499

Interest expense

(388

)

(97

)

Interest income

125

179

Income before taxes

17,072

17,581

Provision for income taxes

4,951

5,591

Net income

$

12,121

$

11,990

Earnings per share:

Basic

$

0.38

$

0.36

Diluted

$

0.38

$

0.36

Dividends declared per share

$

10.70

$

0.19

Weighted average common shares outstanding:

Basic

31,734

32,552

Diluted

31,757

32,579

KAYDON CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

March 31,

December 31,

2012

2011

Assets:

Cash and cash equivalents

$

36,291

$

225,214

Accounts receivable, net

88,154

78,441

Inventories, net

117,340

110,206

Other current assets

16,443

16,701

Total current assets

258,228

430,562

Property, plant and equipment, net

167,108

168,946

Goodwill, net

158,038

157,087

Other intangible assets, net

30,875

31,140

Other assets

4,873

3,962

Total assets

$

619,122

$

791,697

Liabilities and Shareholders' Equity:

Accounts payable

$

17,750

$

19,699

Accrued expenses

33,434

29,766

Current portion long-term debt

7,500

-

Total current liabilities

58,684

49,465

Long-term debt

142,500

-

Other long-term liabilities

57,598

57,594

Total long-term liabilities

200,098

57,594

Shareholders' equity

360,340

684,638

Total liabilities and shareholders' equity

$

619,122

$

791,697

KAYDON CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three Months Ended

March 31,

April 2,

2012

2011

Cash Flows from Operating Activities:

Net income

$

12,121

$

11,990

Adjustments to reconcile net income to

net cash from operating activities:

Depreciation

5,010

4,821

Amortization of intangible assets

739

665

Amortization of stock awards

891

906

Stock option compensation expense

1,116

321

Excess tax benefits from stock-based compensation

(702

)

(21

)

Deferred financing fees

346

97

Contributions to qualified pension plans

(634

)

(478

)

Net change in receivables, inventories and trade payables

(18,216

)

(10,459

)

Net change in other assets and liabilities

5,286

(571

)

Net cash from operating activities

5,957

7,271

Cash Flows from Investing Activities:

Capital expenditures

(3,307

)

(4,328

)

Dispositions of property, plant and equipment

1,793

69

Net cash used in investing activities

(1,514

)

(4,259

)

Cash Flows from Financing Activities:

Proceeds from long-term borrowings

150,000

-

Debt issuance costs

(1,357

)

-

Cash dividends paid

(342,490

)

(6,279

)

Purchase of treasury stock

(1,199

)

(13,976

)

Excess tax benefits from stock-based compensation

702

21

Proceeds from exercise of stock options

15

39

Net cash used in financing activities

(194,329

)

(20,195

)

Effect of exchange rate changes on cash and

cash equivalents

963

2,480

Net decrease in cash and cash equivalents

(188,923

)

(14,703

)

Cash and cash equivalents - Beginning of period

225,214

286,648

Cash and cash equivalents - End of period

$

36,291

$

271,945

KAYDON CORPORATION

REPORTABLE SEGMENT INFORMATION

(In thousands)

Three Months Ended

March 31,

April 2,

Net sales

2012

2011

Friction Control Products

$

65,803

$

60,872

Velocity Control Products

24,299

19,626

Other Industrial Products

26,364

27,843

Total consolidated net sales

$

116,466

$

108,341

Three Months Ended

March 31,

April 2,

Operating income

2012

2011

Friction Control Products

$

11,819

$

9,874

Velocity Control Products

5,842

5,826

Other Industrial Products

1,909

2,537

Total segment operating income

19,570

18,237

Items not allocated to segment operating income

(2,235

)

(738

)

Interest expense

(388

)

(97

)

Interest income

125

179

Income before taxes

$

17,072

$

17,581

The Company has two reporting segments: Friction Control Products
and Velocity Control

Products. The Company’s remaining operating segments are combined
and disclosed as